The Next Economy: Survival Guide

How to Market to Minorities

Racial and ethnic markets are ballooning. But tapping them takes some sophistication.

By Alina Tugend

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(AP Photo)

The notion of marketing to minorities and ethnic groups has an unsavory undertone. Tobacco companies have long used rappers and hip-hop concerts to peddle cigarettes to young African-Americans, and studies have shown more liquor advertising around universities popular among Hispanics. This kind of targeting still occurs as minority groups—mainly Hispanics, blacks, and Asians—keep growing nationwide. But businesses increasingly find it necessary to appeal to them in sophisticated ways that celebrate rather than demean their culture.

“The big change is recognition of the market,” said Raul Lopez, president of Phoenix Multicultural, a marketing research company in Miami. “No one talked about multicultural marketing when I first started doing this 32 years ago.”

But they’re talking now. And eyeing big bucks.

“The Hispanic market alone, at $1 trillion [in 2010], is larger than the entire economies of all but 14 countries in the world,” said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia’s business school, which reports annually on minorities’ buying power. Despite the recession, he said, Hispanics’ buying power is expected to grow by 50 percent in the next five years. Asian-Americans’ buying power (now at $544 billion) is forecast to expand by 42 percent, and African-Americans’ (currently at $957 billion) by 25 percent.

Which is to say, racial and ethnic markets are out there. The question is how to tap them.

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Advertisers have considered these questions before. After the 1980 census measured Hispanics at 6.4 percent of the U.S. population, businesses started paying attention, Lopez said. At the same time, Spanish-speaking television networks Univision and Telemundo were expanding coast to coast, offering a vehicle for merchants to reach consumers in their native tongue.

Much has changed in the 30 years since. As the Hispanic population has exploded—to around 16 percent of the U.S. population in 2010—it has also become increasingly segmented.

“About 15 to 20 percent is fairly [Americanized],” Lopez said. “You’re not going to reach them on Univision and Telemundo.” Then there are newer immigrants and others who haven’t learned English and can be reached only in Spanish. Larger than either group, however, are the Hispanics who bestride cultures. “They live both ways,” Lopez said, “like adopting the Thanksgiving celebration. They may make turkey, but instead of sweet potatoes, they’ll do black beans and rice.”

“Most of the advertising that fails tends to be condescending.”

Adding to the complexity, each of these segments is divided further by country of origin—Mexican food isn’t the same as Venezuelan or Colombian—and by economic class. Companies must connect “with the consumer at the cultural level, at their values and beliefs and way of thinking,” advised Felipe Korzenny, who runs the Center for Hispanic Marketing Communication at Florida State University. An example: The importance of family, including the extended variety in Hispanic culture, means advertising should picture the grandparents as well as the parents and kids. Another crucial value, Korzenny noted, is a sense of community and helping others. A truck commercial showed the vehicle coming to a neighborhood’s aid instead of depicting a macho driver behind the wheel.

“Most of the advertising that fails tends to be condescending not just with the advertising but with the approach,” Korzenny said. He cited a business that never took off: a Hispanic bank. “That was a really bad idea. Hispanics are not stupid—that’s telling them that they’re second-class citizens,” Korzenny explained. “When they have money, they want to go to a bank with a big reputation.”

These distinctions can be subtle. When the supermarket chain Publix opened a few stores around Florida called Publix Sabor—Spanish for flavorful—that sold myriad Latin American foods, customers flocked in. What is more appealing, after all, than one’s own cuisine? The multicultural marketing company Translation says on its website, “The difference between ethnic stereotyping and cultural accuracy is all in the details.”

This is certainly true with blacks, the nation’s second-largest minority, with 13 percent of the population. Howard Buford, president and CEO of Prime Access, a multicultural marketing and advertising company in New York City, finds some truth to the stereotype that African-American boys and young men are drawn to expensive brand names. “When coming from a group that has been devalued, they tend to embrace brand names more highly,” he said. “The message is: I have money and I do value myself.”

Buford recounted a black woman’s story: “Her husband does very well; her kids are in great schools. But she told us: ‘When I walk into an upscale department store, the salespeople won’t approach me. So I buy a very trendy handbag and then when salespeople come up to me, they treat me like royalty.’ ”